These are hard times for global markets, especially for all stock markets in the world that spent the day in the bright red. The financial hurricane was announced last week and as a result world stock exchange indexes lost a significant percentage of their value.
Traders hope that there technical recovery will occur this week, but it might all remain a hope. The downward movement is too comprehensive and too widespread and that is the reason why traders around the world return to the markets by saying that the worst of the storm is behind them.
The public is kept in the dark with speech at once reassuring and tight linking stock market movements to complex interactions between different economies and complicated and remote factors. The stock market remains a vaguely mysterious realm is well suited to many people. Yet it’s not very complicated.
Over the last several years, the biggest central banks in the world, including European Central Bank, Federal Reserve, Swiss National Bank and the Bank of Japan have data for word address the crisis in which their economies are deliberated since 2008 and the battering that shook the financial world, which later continued with the subprime bubble, Lehman Brothers crisis of public debt and so on. It is not easy to give a precise date for the origin of this deliberate policy, but to the point where we are, the importance of it rises.
Correspondingly, it would take too long to make an inventory of all the crimes and all the lies committed by central bankers incontrollable in the handling of currencies which they are responsible. However, for simplicity, whatever the excuses displayed by each central bank, all manipulations were more or less the same effect, which means that interest rates reduced to zero or even negative as well as an explosion in the quantity of money in the balance sheet.
This means that the money created by central banks profusion flooded some economic circuits, but not necessarily those that were announced and completed companionships in the world where a financial bubble inflated.
Whether the reason was the need of authorities to create the illusion of good economic health of societies or not, it is difficult to decide undoubtedly between deceitfulness and incompetence, but the fact is that for years, more and more obvious, the prices of corporate shares are totally uncorrelated economic activity actual or even projected, which, of course is not a coincidence.
The fact is that the illusions do not last forever since the financial bubbles are invariably doomed to burst.
Generally, over the past decades many financial institutions became more aware that things are going completely wrong since the economic business goals are not achieved, macroeconomic conditions weaken, while, on the other side, the courses take good stock indexes continue to rise constantly. Of course that it could not happen in normal conditions and without hidden activities that intrude markets, but once we realized that central banks directly buy shares with the money they print, such as Fed in the hugest amounts, everything became clearer.
Yesterday’s „modification” remains minor, while the worst is yet to come. Many traders wonder why the crisis exploded on Monday in August, taking the hypothesis that it really broke yesterday that we cannot verify that the coming days. The fact is that that it was evident for a while, while it has just became more visible yesterday.
As a result, there are two new issues that changed the perception of the world economy. The first relates to the major raw materials extraction companies reported disappointing figures, since China is the world’s factory and its plants use raw materials.
The second is linked to international trade. The main problem with the programs “progressive” central banks is that you can print money and simulate financial health by manipulating the stock market, but you cannot simulate consumption of raw materials or transport existent goods. Reality resumed with losses on the financial markets. The extent of the decline and its global nature suggests that central banks interventions are increasingly visible and that this is not the end.